Is a dynamic equity split the best way to split shares?
While there hasn’t been much written about dynamic equity splits they are hands down the most fair way to divide up shares in a start-up company among founders, early employees, partners and anyone else that deserves a slice of the pie.
What is the difference between fixed and dynamic equity?
A fixed equity model, no matter how thoughtful and well-intended, is guaranteed to treat one or more people unfairly. A dynamic model, on the other hand, will allow you to determine exactly the right number of shares each person deserves based on (and here is the key) the relative value of their individual inputs.
What differentiates top VCs from other VCs?
Being able to source proprietary deal flow through your network is probably the number one differentiator in top VCs, and is what keeps top VCs at the top with an unfair competitive advantage.
What makes a great VC great?
Great VCs are always thinking ten steps down the road, which can split into a variety of paths, and are able to be hyper-focused on business value and potential strengths, regardless of how ‘ out there ’ the pitch is.
How to structure an equity split for Your Startup?
Granted, there is no one right way to structure an equity split, and the best solution likely depends on the specific circumstances of each startup. Therefore, it is highly advisable to solicit advice from an attorney before finalizing any equity split agreement.
What is a vesting schedule in equity split agreement?
A vesting schedule specifies when and how co-founders can exercise the stock options awarded in the equity split agreement. A typical vesting schedule allows for incremental vesting over a four or five year period with a large portion of options vesting at the end of the first year.
How much equity should be split among co-founders?
This example for an equity split following the first round of funding comes from global equity firm Advent International: Founders: 20 to 30 percent divided among co-founders. The distribution is rarely exactly 50/50